{"data":{"id":"us-ky/krs-286.4-530","jurisdiction":"us-ky","citation":"KRS 286.4-530","heading":"Basic, default, and deferment charges -- Refund upon prepayment --","body":"Reduction when installments in default -- Charges computed on unpaid\nbalance -- Principal may include balance on prior loan -- Loan entered into\nwithin 10 days of another loan -- Restrictions on interest and consideration.\n(1) (a) Every licensee may lend any sum of money not exceeding fifteen thousand\ndollars ($15,000), excluding charges, and may charge, contract for, and\nreceive on any loan charges not in excess of:\n1. If the original principal amount of the loan, excluding charges, does not\nexceed five thousand dollars ($5,000), three percent (3%) per month on:\na. The original principal amount of the loan; and\nb. Any charges, including fees, costs, expenses, or other amounts ,\nauthorized by this subtitle on the loan contract;\n2. If the original principal amount of the loan, excluding charges, exceeds\nfive thousand dollars ($5,000) but does not exceed ten thousand dollars\n($10,000), two and forty-two hundredths percent (2.42%) per month on:\na. The original principal amount of the loan; and\nb. Any charges, including fees, costs, expenses, or other amounts,\nauthorized by this subtitle on the loan contract; and\n3. If the original principal amount of the loan, excluding charges, exc eeds\nten thousand dollars ($10,000), two and one -fourth percent (2.25%) per\nmonth on:\na. The original principal amount of the loan; and\nb. Any charges, including fees, costs, expenses, or other amounts,\nauthorized by this subtitle on the loan contract.\n(b) The charges authorized under paragraph (a) of this subsection shall be\ncomputed in advance at the agreed rate on scheduled unpaid principal\nbalances of the cash advance on the assumpti on that all scheduled payments\nwill be made when due.\n(c) The total amount of the precomputed charges under paragraph (b) of this\nsubsection shall be added to the original cash advance and other charges,\nincluding fees, costs, expenses, or other amounts, a uthorized by this subtitle\non the loan contract, and the resulting sum shall become the face amount of\nthe note.\n(d) Every loan payment may be applied to the face amount of the note until the\nloan contract is paid in full.\n(2) For the purposes of computation under subsection (1) of this section:\n(a) Whether at the maximum rate or less:\n1. A month shall be that period of time from any date in a month to the\ncorresponding date in the next month and, if there is no corresponding\ndate in the next month, then to the last day of that month; and\n2. A day shall be considered one -thirtieth (1/30) of a month when the\ncomputation is made for a fraction of a month; and\n(b) The portion of the charges applicable to any particular monthly installment\nperiod, as originally scheduled or following a deferment, shall bear the same\nratio to the total charges, excluding any adjustments made pursuant to\nsubsection (3) of this section, as the balance scheduled to be outstanding\nduring that monthly period bears to the sum of all monthly balances scheduled\noriginally by the loan contract.\n(3) For any loan contract, a licensee and borrower may agree:\n(a) On a first installment date that is not more than fifteen (15) days more than\none (1) month; and\n(b) That the amount of the first ins tallment may be increased by one -thirtieth\n(1/30) of the portion of the charges applicable to a first installment period of\none (1) month for each extra day.\n(4) If one -half (1/2) or more of any installment remains unpaid more than seven (7)\ndays after it is due, a licensee may charge and collect a default charge not exceeding\ntwo cents ($0.02) for each dollar of the scheduled installment, and this charge may\nbe collected for each full month the installment remains unpaid.\n(5) (a) If the payment of all whol ly unpaid installments on which no default charge\nhas been collected is deferred one (1) or more full months, a licensee may\ncharge and collect a deferment charge not exceeding two cents ($0.02) for\neach one dollar ($1) of the sum of the installments so de ferred, multiplied by\nthe number of months the maturity of the contract is extended, except the\nnumber of months extended shall not exceed the number of installments\nwhich are due and wholly unpaid or due within fifteen (15) days from the date\nof deferment.\n(b) The deferment charge may be collected at the time of deferment or at any time\nthereafter.\n(c) Any payment received at the time of deferment may be applied first to the\ndeferment charge and the remainder, if any, applied to the unpaid balance of\nthe loan contract, except if the payment is sufficient to pay, in addition to the\nappropriate deferment charge, any installment which is in default and the\napplicable default charge, it shall be first so applied and that installment shall\nnot be deferred or subject to the deferment charge.\n(d) At the time a deferment is made, the borrower shall be given a statement or\nreceipt showing:\n1. The amount of the deferment charge;\n2. The date and amount of the next scheduled payment; and\n3. The number of remaining scheduled payments.\n(6) (a) Except as otherwise provided in this subsection, if a loan contract is prepaid in\nfull by cash, a new loan, or otherwise before the final installment date, the\nportion of the charges applicable to the full installment periods followi ng the\ninstallment date nearest the date of prepayment shall be refunded.\n(b) Any default or deferment charges which are due and unpaid on the loan\ncontract may be deducted from the refund required under this subsection.\n(c) Any tender made by a borrower o r at his or her request of an amount equal to\nthe unpaid balance less the refund required under this subsection shall be\naccepted by a licensee in full payment of the loan contract.\n(d) If judgment is obtained before the final installment date, the contrac t balance\nshall be reduced by the refund which would be required for prepayment in full\nas of the date judgment is obtained.\n(e) A licensee shall not be required to make a refund:\n1. Of less than one dollar ($1); or\n2. For partial prepayments.\n(7) If two (2) or more full installments are in default for one (1) full month or more at\nany installment date and if the loan contract so provides, a licensee may reduce the\ncontract balance by the refund or credit which would be required for prepayment in\nfull on the installment date. Thereafter, in lieu of charging, collecting, or receiving\ncharges as provided in subsections (1) to (6) of this section, charges may be\ncharged, collected, and received as provided in subsection (8) of this section until\nthe loan contract is fully paid.\n(8) (a) In lieu of computing and collecting charges as provided in subsections (1) to\n(6) of this section, a licensee may contract for, collect, and receive on loans of\nfifteen thousand dollars ($15,000) or less charges as permitt ed in subsection\n(1) of this section computed on the unpaid balance of the loan from time to\ntime outstanding.\n(b) The charges permitted under paragraph (a) of this subsection shall not be paid,\ndeducted, received in advance, or compounded, but shall be co mputed,\ncollected, and received only on unpaid balances for the time actually\noutstanding.\n(c) The definition of a month and of a day in subsection (2) of this section shall\napply for the purposes of the computations under this subsection.\n(9) If part or a ll of the consideration for a loan contract is the unpaid principal balance\nof a prior loan with the same licensee, then the principal amount payable under the\nnew loan may include the balance remaining on the prior loan after giving the\nrefund required by subsection (6) of this section.\n(10) (a) In addition to the charges provided for in this subtitle, no further charge or\namount whatsoever for any examination, service, brokerage, commission,\nexpense, fee, bonus, or other thing shall be directly or indirec tly charged,\ncontracted for, or received, for an extension of credit under this subtitle\nexcept:\n1. The lawful fees actually and necessarily paid out by the licensee to any\npublic official for filing, recording, or releasing in any public office any\ninstrument securing the loan;\n2. The identifiable charge of premium for insurance provided for in KRS\n286.4-560; and\n3. Fees for noting or releasing a lien on or transferring a certificate of title\nto any motor vehicle offered as security for a loan made under t his\nsubtitle.\n(b) If any amount in excess of the amounts authorized by this subtitle is charged,\ncontracted for, or received, except as the result of an accidental or bona fide\nerror, the lender shall have no right to collect or receive any charges\nwhatsoever.\n(11) (a) A licensee shall not induce or permit a person to become obligated to the\nlicensee, directly or contingently, or both under any loan contract entered into\nwithin ten (10) days of the origination of another loan contract with the same\nperson f or the purpose or with the result of obtaining charges greater than\nwould otherwise be permitted by this subtitle.\n(b) For a second or subsequent loan made by a licensee to any person outside of\nthe ten (10) day period referenced in paragraph (a) of this s ubsection, the\nlicensee shall not be required to limit the loan charges to the aggregate\namount of what the loans combined would dictate under this subtitle.\n(12) A licensee shall not directly or indirectly charge, contract for, or receive any\ninterest or consideration greater than the lender would be permitted by law to\ncharge if the lender were not a licensee:\n(a) Upon any loan in the amount or of the value of more than fifteen thousand\ndollars ($15,000), excluding charges; or\n(b) In any case in which the licensee permits any individual as borrower, indorser,\nguarantor, or surety for any borrower, or otherwise, to owe on any loan or\nloans directly or contingently, or both, to the licensee at any time the sum of\nmore than fifteen thousand dollars ($15,000), excluding charges.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53997","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:11Z","sha256":"0966fbbf17001055d45abbcf4fda09a000f49f654ce40d02d966abd359dbc99a","source_id":"us-ky","stale":false,"prev":"us-ky/krs-286.4-520","next":"us-ky/krs-286.4-533"},"notice":"GroundRules: Original legal text. Not legal advice."}